Greetings, and welcome to the Bricksmore Property Group 4th Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stacey Slater. Thank you. You may begin.

Thank you, Operator, and thank you all for joining Bricksmore's fourth quarter conference call. With me on the call today are Brian Finnegan, CEO and President, and Steve Gallagher, Chief Financial Officer. Mark Horgan, Executive Vice President and Chief Investment Officer, will also be available for Q&A. Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties, as described in our SEC filings, and actual future results made different materially. We assume no obligation to update our forward-looking statements. Also, we will refer today to certain non-GAAP financial measures. Further information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the Investor Relations portion of our website. Given the number of participants on the call, we kindly ask that you limit your questions to one per person. If you have additional questions, please re-cue. At this time, it's my pleasure to introduce Brian Finnegan.

Thank you, Stacey, and good morning, everyone. I am thrilled to join you today for my first call as permanent CEO of Bricksmore, a company that has been my professional home for more than 21 years. Before touching on our results, I will share a few comments on our leadership succession and strategy going forward. Thank you to Jim Taylor, proud to be by his side for the last nine and a half years, and the Bricksmore team for their support. I am grateful to step into this role at a moment of real strength for the company. Our portfolio transformation, nationally well, takes the strength of retail, remain favorable. Consumers have been resilient. The physical store, historic lows. The operating platform stands out. To market opportunity, while our future reinvestment and sign-but-not-commence pipeline on future growth and cash flows. Any changes to our operating model in the near term, taking on more responsive executive vice president, capital markets, corporate strategy, and investor relations, south region president, to include national property operations. Both will join our executive commitment we implemented 18 months ago, consolidating from four to three regions, technology and analytics. Early initiatives in AI and automation are already yielding positive results in areas such as lease abstraction and summarization, tenant health analyses, and remain disciplined but opportunistic. Under Mark's leadership, we were net acquirers in four of the last five years, with 2025 being our most active year as a public company at approximately $420 million of asset value, acquired in Houston, Southern California, and Denver. Allocating capital towards opportunities where our platform can create outsourcing to rely on acquisitions for growth, and we are mindful of our balance sheet in every capital allocation decision we make. Let's turn to our results for the quarter and the year, which were exceptional. Touch on further, I grew by 4.2% for the year, even as we recaptured 1.5 million square feet of anchor space. The year was at the high end of our guidance range at $2.25 per share and up 5.6% year-over-year. Record leasing year, increasing to a new high of 92.2% and ended the year with the largest sequential overall occupancy gain in the company's history, up 100 basis points to 95.1%. High quality tenants remains robust. As within the over 3 million square feet of new leases executed last year, we signed eight new grocer leases with strong operators such as Publix. Big why? Each of the leading retailers in the off price segment. impressed by the depth and credit quality of the operators in the health and wellness, quick service restaurant, and service segments, as we continue to attract a higher caliber tenant to this portfolio. The strength of our small shop tenancy is also evidenced by the fact that 70% of our small shop rent is derived from multi-unit operators. We continue to capture the mark-to-market upside in the portfolio, with new lease rent growth for the year at 39 percent and renewal rent growth for the year at 15 percent, resulting in our third consecutive year of mid-teens renewal growth. We also saw improvement in our retention rate, which at year-end was 87 percent, a 180 basis point improvement from last year. Switching to operations, we continued to deploy capital efficiently to reduce our deal costs year over year and the lowest since 2021, while maintenance capex spending was at our 16 outside of the pandemic year. At year end of the reinvestment front, we stabilized 183 million of projects in 2025 at an attractive 10% incremental yield. This included some of the most impactful projects in the company's history, such as the Davis collection, where we tore down an obsolescent anchor adjacent to a high-performing Trader Joe's grocer and delivered a new Nordstrom Rack, Ulta, J. Crew Factory, Mendocino Farms, UC Davis. $36 million in the active pipeline, including Rockland Plaza, which we added to the active pipeline this quarter as we kick off the redevelopment of this well-located center in the New York metro area with Nordstrom Rack, raw stress for less, several exciting shop tenants, and redevelopment in what we already own and control in Denver and Southern California in the fourth quarter. Both have immediate leasing and mark-to-market upside, are accretive to our long-term growth profile, and are in markets that our West Region team has created significant value in. ROI going forward, asset in Alabama. Tenant lineup reflects the start of our company's history. It looks the best it ever has. Our balance sheet is in the strongest position it has ever been, and our platform is positioned to drive us for what lies ahead, and grateful to lead this team as we accelerate our business With that, I'll hand the call over to Steve for a deeper review of our financial results and 2026 outlook.

Consistently throughout the year, this 2% same meaningfully improved our contribution from base rent growth due to stacking rent commencements from late 2024 and all of 2025. Ancillary and other income contributed an additional 200 basis points, reflecting our team's proactive asset management initiatives to drive revenue across the port. Nareed FFO is $0.58 per share in the fourth quarter, benefiting from strong same property NOI performance and elevated lease termination income. We anticipated higher lease termination activity as we proactively recaptured space to unlock value of these transactions in the Bay Area. Same property NOI increased 4.2% for the base rent contributed 360 basis points, and ancillary and other income added 100. Equally, by the updated recurring parking agreement at Point Orlando, discussed on our prior calls, and asset management initiatives. $0.25, executing another $70 million of net rent. Pure indication of the depth and durability of demand. Leased and billed occupancy ended the period, but not yet commenced. 25 rent commencements, contributions from redevelopment, and was assigned by not 4.5 to 5.5% same property NOI growth, driven by more than 450 basis points. Continued transformation across the portfolio has meaningfully enhanced the credit quality of our tenant base, which is now the strongest we've seen. As a result, we expect revenues deemed uncollectible at 75 to 100 basis points of total revenues. In terms of cadence, we expect base rent growth to accelerate throughout the year as we commence the significant rent embedded in this ffo guidance reflects the strength of our same property noi trajectory for 2026 we are introducing nareed ffo guidance of two dollars and thirty three to two dollars and thirty representing four point four percent growth at the midpoint across the portfolio remains highly efficient with leasing and maintenance capital expenditures down approximately 26 million year-over-year net effective rents to record 23 dollars in 60 several years while enhancing the overall quality and appearance of our centers we ended the period with a 1.6 billion of available liquidity 25 issuance which pre-funded our june 2026 600 million 4.125 percent maturity debt to ebitda is 5.4 times leaving our balance sheet well positioned to our performance continues to highlight the durability of our fundamentals and the attractiveness of our strategy. Supported by FFO growth of 4% plus since 2022, 4% dividend yield and a dividend growing at a 6%. I want to thank our team for their ongoing dedication and execution, which remains a key driver of our performance. And with that, I'll turn the call over to the operator for Q&A.

Thank you. We will now be conducting a question and answer session. We ask that all callers limit themselves to one question. If you have additional questions, you may re-queue, and those will be addressed, time permitting. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Michael Goldsmith with UBS. please proceed with your question.

Good morning. Thanks a lot for taking my question. You're guiding for bad debt this year, 75 to 100 basis points. I guess as you entered last year, you guided to 75 to 110 basis points. I think you called out an upgraded portfolio quality or upgraded tenants. But I guess to try to, can you provide a little bit more detail there? And how How much does the, you know, does this new guidance range, like, reflect just line of sight into tenant bankruptcies?

Michael, thanks for the question, and I'll start and let Steve take it. As both of us touched on these recaptures, you would see improvement in what was already the strongest. If you think about our low drugstore exposure, if you look at tenants, as I mentioned, 70% of our small shops are for multi-tenant operators. all the work that we've done to the portfolio has just allowed us to attract a much stronger tenancy. So that's reflected in terms of the guidance going forward.

Thank you very much. Good luck in 2026.

Thanks, Michael. We appreciate it.

Our next question comes from the line of Todd Thomas with KeyBank. Please proceed with your question.

Hi, thanks. Good morning. I wanted to ask about the acquisition environment and thoughts on investments and capital recycling activity going forward. Brian, you touched on this in your prepared remarks, and maybe Mark can weigh in as well, but just wanted to get your thoughts on the pipeline heading into 26 in terms of volume and pricing. And then second part, Steve, in the guidance reconciliation, it looks like there is one cent of growth related to transactions. Can you just speak to that, whether that's based on 2025 activity or if there's something implied from the forecast, you know, as a result of that.

Thanks for the question, Todd. Maybe I'll touch briefly at the start. We just have been very encouraged by what we've been seeing on the transaction front. What's interesting is 40% of the volume that marks in a very found opportunity, and that's really what we saw last year, and was a great lever for us to drive additional value beyond the growth in our base portfolio.

However, I would highlight that the first dollar free cash flow is going to go to redevelopment given the great returns and yields we see. From an overall market perspective, we're certainly seeing cap rate compression. It's coming in. It's directed towards smaller southeast in California. We continue to see smaller bid lists for larger deals, like a Chino that we bought last year, that really have an operating nature of the business, which fits well for the Bricksmore platform.

Yeah, and on the guidance front, I mean, that walk-down is really sort of a grossed-up approach just to help people understand the components, not necessarily from a capital allocation. I think when you're just, and Mark has touched on this in previous calls, he's sort of neutral in the initial year. And then I think the profile of those assets we're acquiring are going to grow more than those assets that we're selling.

Okay, thank you. Thanks, Todd.

Our next question comes from the line of Handel St. Just with Mizuho. Please proceed with your question.

Hey, guys. Thanks for taking the question. I wanted to go back to the guide for a bit. I was hoping you could expound on some of the assumptions, particularly as it relates to the upper end of the same store on a Y guide. It seems a little conservative relative to what you put up last year. You mentioned 450 basis points of base rent growth, I think. There's a lower tenant credit risk backdrop. You have lower occupancy. So I'm just curious if you could maybe give some more color on the pathway or what's embedded at the upper end.

Yeah, I mean, to get to the upper end, and I think Steve hit it, but you can really see the drivers in that walk down. and potentially from 27, how much are we continuing to drive rent growth? So we feel really comfortable with the right and executing.

Great. Thank you, and congrats, Brian.

Thanks, I appreciate it.

Our next question comes from the line of Michael Griffin with Evercore. Please proceed with your question.

Great, thanks. Brian, I know it's been a little over a month since you've been kind of in the permanent CEO role, And I realized that, you know, Bricksmore has a solid history of, you know, blocking and tackling, executing on operations, you know, kind of making the main thing the main thing. But, you know, as you kind of get into the top job, are there any things, whether it's initiatives, how you're looking at the portfolio or platform maybe differently, that you want to kind of be able to, you know, put your mark on the company as you kind of take over in the top role?

Michael, it's a great question. So I'd answer in a few ways. strategy of reinvesting and aggressively operating meaning that we still have occupancy upside we still have the ability to drive we're going to continue to improve that's going to continue to be what we're seeing there we're going to remain very disciplined we don't need acquisition with our regional teams and markets it we know really well an idea of how we and i think the third thing is and i and i touched on it we've always been big on more data-driven just really look at their business, look at ways to, and I mentioned a few of the early wins that we're seeing junior members in terms of how their deployment, really more AI in terms of a really good position as a team. A company has grown during the time that I and a number of us in this room have been here, and it's really kind of taking that and all about charging the business plan going forward.

Great. Thanks so much.

Appreciate it, Michael.

Our next question comes from the line of Craig Mailman with Citi. Please proceed with your question.

Hey, good morning, everyone. I kind of want to hit on the snow pipeline and I'm going to try to frame this in a way that's not too confusing. But, you know, just as you guys have talked about, you know, being a little bit more aggressive, maybe taking back space, which is driving some lease term fees, which would imply some opportunistic moves there that maybe are more accretive than bad debt coming down. You know, the snow pipeline has continued increases as the lease rate has increased. I'm just kind of curious though, the growth profile of the composition of the snow pipeline, like with the ability to you know intentionally kind of replace tenants re-merchandise have lower tenant credit is is the next batch of kind of additions to the snow pipeline just more accretive to ffo than a ffo as you guys can kind of throttle capex or is it am i reading too much into this Like, I'm just trying to get a sense of the potential to kind of inflect higher here, even on the growth, particularly as FFO drops to the, you know, AFFO line.

Craig, it's a great question. I think I understand what you're saying. As Steve touched on, because of the environment and because of the fact that a lot of these retailers have taken on more sales and would lead us to continue to do that, in this environment is significant.

Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Hi, good morning. Just hoping to talk a little bit about the term fees in the fourth quarter, and it looks like there's kind of a change in the pace of non-cash rents that were kind of noted in guidance or line item in guidance. So I hope you can give a little bit more color on the driver of the term fees and the expectations into 2026 and what impact, if at all, that had on the non-cash revenues as we think about sharpening our model for 2026.

Yeah, Juan, I'll let Steve hit on the non-cash, but let me just touch on term fees. And if you take a step back, business would have grown and grow even more in 2026. We had a very unique opportunity in the fourth quarter in a center that we own in the East Bay Area where we controlled the whole site, taking back the coals and the party city, and we have tremendous optionality. We could do a retail plan. There may be an opportunity for us to get the land rezoned for opportunistic for us to take what is a term fee. The amount of that probably wouldn't have been generating, call it $4 to $6 million instead of left, where there's an environment, a significant amount of demand that we could be opportunistic there. What you're seeing in that walkdown is specific to that large term fee that we took in the fourth quarter, and it was a very, very unique situation. So, Steve, why don't you hit on the non-cash?

Yeah, the non-cash, and we talked about it on previous calls, is really acceleration of year. So that was more focused on those tenants and not something that we expect to recur going forward.

Our next question comes from the line of Greg McGinnis with Scotiabank.

Please proceed with your question.

Hello, this is Victor Fedevon. It's Greg McGinnis thanking our question. In terms of external growth, so the Q4 acquisitions seem to fit the traditional grocery anchor mold. And are you seeing better risk-adjusted returns in these core grocery assets right now compared to the value-add lifestyle opportunities you discussed earlier in 2025?

I'll let Mark take that. You know, I think if you look at what we've been buying over the years, we're going to really drive out to the classic opportunistic at the end of the year, which is on the West Coast in L.A. All those assets have great opportunities for the Bricksmore platform to apply our platform to drive higher yields going in, drive longer-term growth. And that's what we're really focused on, not necessarily the asset type. We're looking for growth that occurs in our footprint and where we can apply our platform that may be in a lifestyle center with great growth opportunities like Lost and Terra or it could be a great result of an opportunity like...

Our next question comes from a line of Caitlin Burroughs with Goldman Sachs. Please proceed with your question.

Hi, everyone. Good morning. Maybe another question on the snow pipeline. So it's off its highs as economic occupancy has gone up, which is great. But I guess looking forward, when you consider leasing demand and the amount of vacancy that you do have, what is your view on the snow pipeline replenishing itself kind of as we go forward?

Yeah, Caitlin, we remain very encouraged with the demand environment. That snow pipeline has been fairly sticky at around $60 million, even though we've been commencing anywhere from 15 to conversations we're having. They're looking to open store count confident in terms of our ability to continue to replenish that. I mentioned occupancy upside. We're still 50 basis point least occupancy perspective. And that was a note by no means a cap on the portfolio because the portfolio is in a much better position today. So really about what we're seeing from an overall demand environment as we move into the year to replenish the pipeline.

Our next question comes from the line of Samir Kunal with Bank of America. Please proceed with your question.

Yeah, good morning, everybody. I guess, Steve, just curious on this, the other revenue ancillary income component, I guess what's assumed as part of guidance this year? I know, you know, last quarter you talked about the parking agreements, you know, that benefited some of this quarter. Like, how should we think about that sort of line item of other revenue as we think about 26?

You know, one income. income.

And Samir, I would just add Steve hit on it, but this is a team of operators. Create value in our drive revenue. We're seeing higher rents in terms of electric. We're seeing very interesting uses in terms of that temp inline space. So from that perspective, the specialty team's done a great job. And as part of the realignment a few years ago, we partnered that more with the operating platform. So there's a lot of collaboration with our property management teams, with our leasing teams in the region, they're working side by side. And so Steve did point out some, but the nature of that is going to be recurring. So we feel really good about the trends and the specialty business going forward, but more importantly, how our team's working together to drive value.

Our next question comes from the line of Cooper Clark with Wells Fargo. Please proceed with your question.

Great. Thanks for taking the question. I know we touched on the acquisition side earlier, So curious if you could comment on the disposition pipeline as it stands today in terms of volumes and how we should think about the disposition cadence throughout the year, given some of the strength in market pricing and opportunity to reinvest decretively with your redevelopment pipeline. Also curious on the depth of bidder pools and what buyers are seeing most aggressively pursue deals. Sure.

For the dispos, what they've had to go after, and that's really allowing us to drive cap rate portfolio. In terms of who those are, it's pension funds, it's high net worth, you're seeing low groups come back out of the woodwork. So it's a really healthy market today. And as I mentioned earlier, the biggest difference is really size, which was $140 million or $138 million. That bid list was actually quite small and really allowed us to find a great opportunity to drive higher IRs given the demand there. So we remain really convicted about our ability to sell, again, lower IR and buy higher IR.

We're really excited about that opportunity.

Our next question comes from the line of Connor Mitchell with Piper Sandler.

Please proceed with your question.

Hey, thanks for taking my question. Just going back to the bad debt outlook for this year, just kind of thinking about the watch list. You mentioned that you've had limited exposure to pharmacies or theaters. But just wondering if you could kind of put some context around the general watch list and what you're seeing within your portfolio, Whether that's maybe a majority of the watch list or higher up on the watch list are kind of one-off situations where there's upcoming debt maturities and it's more of a balance sheet issue and that's the worry. Or if more of those tenants retailers are kind of more within like a theme or a service type kind of group together.

Yeah. Connor, it's a good question. And it's something that we are always watching this team. The other thing that we feel the company's ever had on a monthly basis, our teams are reviewing it daily, and the trends we see are very positive. We're not seeing an uptick away the bankruptcies. We're, again, historic lows for the portfolio, retention rates up, renewal growth in the mid-teens. So I think all those trends give you visibility into the health of the portfolio. There's always a handful of names that we're watching. It just tends to be...

Our next question comes from the line of Mike Muller with J.P. Morgan. please proceed with your question.

Yeah, hi.

Can you talk a little bit more about, I guess, using tech in the AI to evaluate tenant health, and has it changed your watch list in any material way as a result of the approach?

Yeah, one of the things we're looking at, Mike, it's a great question, is not, you all on the phone have the names you may be watching or the categories that I mentioned, but it's really those, where can we start to get some early signals, right? It's not just, hey, well, the tenant, we start to see where that, it's things like that, all the data that we have across the entire platform to just make more data-informed, data-driven decisions. So, it's something that was a big focus of ours as part of the realignment to get consistency in the types of dashboards that we're using, improvement and serpent throughout the year. So, that's just one aspect of it. And I think as we continue to deploy things throughout the year, we'll continue to share some of the benefits. But I'm really pleased at how the team has adopted, or really across the board.

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.

Thanks for taking my question. The improved retention rate of 87%, I guess that helps support the record low CapEx down 14% year over year. How sustainable do you view lower CapEx spend if you had to look out a few years?

We certainly see it at this run rate, Linda. It's a great question in terms of where we are. So I kind of break it down a few ways. We still, where we have seen the declines, I think, again, reach more willing to take for maintenance overhang of this portfolio is behind us from a maintenance CapEx perspective. This is now three years running of maintenance CapEx lowest for the portfolio, the lowest since 2016 outside of the pandemic year, and we have been very intentional. You're thinking now it's more roofs and parking lots, but even within that, the fact that we're doing portfolio-wide roofing bids, the fact that our property managers are working with our redevelopment teams in terms of some of the things that we may need to improve in those reinvestments to avoid future CapEx going forward, and then you just look at it on the expense side as well from a recovery rate, all the work that we've done in cleaning up our can clauses has allowed us to get paid back for the operating expense investment that we've been making in our assets. So you put that all together, in addition to the environment, it's leading to lower capex, and we feel like we're in a good position right now.

Thanks for the color, and good luck.

Thanks, Lynette. Appreciate it.

Our next question comes from the line of Paulina Rojas with Green Street. Please receive your question.

Good morning. My question is about dispositions. I find it interesting that some of the assets that you have sold had low occupancy. Westchester Square, Springdale, and a few others sold earlier in the year. Not too many, but some. Which would suggest that perhaps those assets had remaining upside. So my question is, did these centers have anything in common that made it more compelling to pursue a sale rather than driving additional occupancy internally, particularly given the good leasing momentum?

Yeah, it's a great question, and I think you've seen a mix there historically, Paulina, of several centers too. We are focused on, you're going to put those dollars to work. You've seen us do that.

Our next question comes from the line of Teo Otasona with Deutsche Bank.

Please proceed with your question.

Yes. Good morning, everyone. Again, congrats, Brian, Stacey. No one is more deserving. Congrats to you as well. Just a question around, again, fundamentals in the strip side just kind of seem very strong across the board. And I'm just curious, as you kind of think about the industry as a whole and, you know, yourself and all your peers, I mean, are we setting up for a year where it's kind of, you know, kind of rising tide lifts all boats? Or fundamentally, do you think we're still going to see differences across all the key platforms? And in this kind of environment, you know, what really are the key things in your mind that would lead to greater success versus, you know, another operator in a space?

Yeah, it's a great question. And there's no doubt the environment is strong. I think we're as well positioned as anybody in terms of all the things that we've been talking on the strength of the redevelopment pipeline. We haven't spent a ton of time in what we already own and control. You think about the projects that we've got with Publix, the one that we just launched this quarter in Metro New York, the one in South Tampa, Plano, Texas, about the nature of that pipeline going forward. And I think if you look at the ability to grow and the ability to do that incrementally and accretively, I think we stand apart. So, yes, the environment is strong. Our retailers are performing. But I think the position that we put the portfolio in really allows us.

Our next question is a follow-up from Caitlin Burroughs with Goldman Sachs. Please receive your question.

Hi, again. You guys mentioned earlier how the balance shoots that net debt to EBITDA of 5.4 times. I guess how are you thinking of that and where you want to be? Is lower better, or are you in the right range, or would you be okay going higher?

We're in the mid-five.

Our next question is a follow-up from Paulina Rojas with Greenstreet. Please proceed with your question.

Thank you. I wanted to follow up on your comments about the improved tenant quality. I think you mentioned that roughly 75, I think you said, of the small shop tenants or multi-unit operators. Can you share some historical context on that metric so we can better compare and contrast the improvement over time?

Yeah, I think it's certainly up from where the trajectory of the port, the fact that we did strong payment trends relative to the record small shop rents that we've been able to achieve. And then if you just think of the overall quality of tenants that we're adding to the portfolio, you look at those higher quality QSRs, right? There is a focus on health and wellness, and whether it's the strong regional operators like Naya and Honeygro or the Cavas or the Tate bakeries that we're attracting to the portfolio. Then you look at some higher-end tenant grill last year. These are names that maybe seven, eight years ago we would not have been attracting to the portfolio, and I think it speaks to consumers in the markets in which we own shopping centers are just demanding more from those markets in terms of the quality of restaurants and the quality of services. And so it gives us the opportunity to provide that. So overall, I think you can see it come through in the types of tenants, the names of the tenants who we're signing, and then just the strength of that tenancy coming through in the rest of the operating metrics.

Thank you.

Thanks, Paulina.

We have no further questions at this time. Ms. Slater, I'd like to turn the call back over to you for closing comments.

Great. Thank you all for joining us today. We look forward to seeing many of you over the next few weeks.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.